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Friday, July 30, 2010

What Would Republicans Do for the Economy?

What's the Republican's strategy for getting rid of the uncertainty they (as opposed to businesses) are so worried about? This is from an interview of Paul Ryan on what the Republicans would do to help the economy:

What would Republicans do for the economy? An interview with Rep. Paul Ryan., by Ezra Klein: ...Paul Ryan: I know uncertainty is a new economic buzzword, but for good reason: If we can reduce it, we’ll unlock capital. I’d revisit some of the major issues over the last year. Health care, energy, taxes, financial regulation. I’m not saying these aren’t important issues. We need to reform the health-care system. But these are the wrong solutions. I would advance different solutions with an eye toward international competitiveness and encouraging saving and investing and encouraging certainty.

Ah, so his solution to uncertainty is to create even more uncertainty about the policies that will be in effect next year? Later in the interview he tries to get out of this box:

... let me clarify one thing:... You can say I’m offering more uncertainty by redoing these laws. I’m saying it’s the quality of these laws that’s the problem. ...

But this assertion has no substance to back it up. When he does reach for examples, he reverts to:

People are just too nervous, they don’t know what the economy will be, what the regulations will be, what the taxes will be...

So the "quality of these laws" argument it pretty hollow, especially since one of the issues we are dealing with is Republican legislation that was rigged to avoid hard choices about the deficit. That is, the low quality of the Republican legislation is causing quite a bit of uncertainty right now about whether the Bush tax cuts will be extended.

Moving along to another part of the interview discussing the tax cuts, again from Paul Ryan:

If the Obama guys said there’ll be no tax increases for two years, it would make a big difference fast. Look at the original [Christina] Romer-[Paul] Romer paper. She’d agree this is not the time to raise taxes.

Not all of the Obama people are "guys," but more to the point, what does Romer actually say? This is from a White House blog post by Christina Romer:

President Obama has made it clear that he favors extending the 2001 and 2003 tax cuts for middle-income families, but letting those for high-income earners expire as called for in current law. Recently, some have argued that extending the high-income cuts is necessary for the economy. This is simply wrong.

People have been trying to use the Romer-Romer paper incorrectly to rebut the policies she supports since the idea of stimulus was first raised by the administration. She has protested, but that doesn't stop the message machine from making the assertion anyway. On this point, back to Romer:

The view that tax cuts focused on the middle class can be important to the recovery is consistent with a wide range of research, including a paper that I wrote with David Romer before coming to government

Another gem from Paul Ryan:

These short-term stimulative things ... pump up some money in the quarter where they occur. ... These short-term stimuli ... don’t change aggregate demand
There's more, but you get the idea. Read it if you want, but the rest of the interview isn't any better. It's mostly the standard austerity line that doesn't make a whole lot of sense in our present circumstances. But it does advance the conservative ideological agenda.

    Posted by on Friday, July 30, 2010 at 12:33 AM in Economics | Permalink  Comments (21)


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